By providing financial relief of approx. €26 billion for municipalities in the 2013-2018 period, not least for child care services, schools, higher education institutions and urban planning, the Federal Government is playing a major part in ensuring that planned investment projects can be implemented – despite the challenges in these areas.
Relieving the financial burden on the Länder and municipalities
The measures include financial assistance totalling €3.5 billion from the municipal investment promotion fund to promote investment by financially weak municipalities. Within the scope of the revision of their fiscal relations, the Federal Government and the Länder agreed in October 2016 that, by means of amending the Basic Law, the Federal Government will be permitted to provide financial support to financially weak municipalities for investments in schools and vocational schools. To this end, the volume of the fund was increased by another €3.5 billion.
Facilitating investment in education and social infrastructure and improving the division of tasks and responsibilities
Affordable housing is a prerequisite for social cohesion and participation in society. The funding being provided to the Länder for urban development and housing construction has been topped up by more than €5 billion up to 2020. This will also help to cope with the current challenge of integrating new refugees into the society. Further to this, the Federal Government has helped the Länder and the municipalities to cope with the refugee situation by providing relief of over €7 billion in 2017.
In order to ensure a high quality of municipal infrastructure, the funding available for investment projects must be used as effectively and economically as possible. The large number and varying nature of municipal construction projects necessitate administrative skills and capacities which are not adequately available to the authorities in all municipalities.
Giving targeted support to the municipalities
For this reason, the Federal Government has set up the newly established consulting agency called “Partnerschaft Deutschland - Berater der öffentlichen Hand GmbH (in german)”, which provides a special advisory service for municipalities to help them in implementing investment projects.
In order to facilitate better and faster investments, the Federal Government and the Länder have agreed to reform the existing system of contract management for federal trunk roads as part of the restructuring of the fiscal relations between the Federal Government and the Länder. In this context, motorways, roads and the infrastructure company itself will remain the sole property of the Federal Government.
Expanding transport routes and promoting energy efficiency
Further investment priorities include building efficient supra-regional transport routes and fostering more efficient use of energy. For example, investments in transport infrastructure grew by around 25 per cent to nearly €14 billion in 2017. In order to further modernise and expand the energy system, investments of up to €50 billion in network expansion will be necessary in the coming years. Better regulation, funding measures and supportive campaigns will create the necessary business environment to enable these private investments.
Promoting research, development and innovation
Since 2005, the Federal Government has increased its spending on research and development by more than 60 per cent. In this way, it is helping to safeguard Germany’s position as an internationally competitive base for innovation and technology.
In addition, the Federal Government is providing one billion euros in grants for microelectronics up to 2020. These grants are intended to trigger investments of over €3.9 billion in Germany. The companies’ projects will be notified together with those from the other EU Member States involved.
Supporting Europe’s investment campaign
Given the close economic integration in Europe, the aim of boosting investments in Germany in a sustainable manner can only be achieved within a prosperous European environment.
Germany is therefore providing substantial support to the European investment campaign and is making approximately €8 billion available via the KfW to finance projects under the European Fund for Strategic Investments (EFSI), which was launched in November 2014. The expansion and extension of EFSI beyond 2019 that was agreed in autumn 2016 will contribute to a sustained revival of investment in Europe.
The monthly report (in german) (PDF, 193 KB) provides more information about the European investment initiative.